The UAW Strikes Signal The Automotive Sector Is In For A Profound Change

This week began with UAW workers at Volvo Group VLVLY-owned Mack Trucks also going on strike, joining the UAW’s targeted strike against the Detroit Three automakers. Since walking out on September 15th, the strike against General Motors GM, Ford F and Chrysler parent Stellantis N.V. STLA gathered 25,000 employees which make about 17% of UAW members, covered by expired contracts with the Detroit automakers. Yet last week ended with UAW deciding not to expand strikes at Detroit’s big three automakers after a last-minute proposal that GM made.

GM Saved The Day

For the first time since the work stoppages began, the UAW decided not to expand the strike despite still not having reached a tentative agreement with General Motors, Ford and Stellantis. UAW was about to shut down the GM-owned Arlington Assembly plant that produces highly profitable full-size SUVs when the automaker agreed to include battery cell workers under the company’s national agreement. Officially, because of being formed by joint ventures, the battery plants aren’t covered by the automakers’ agreements with the union. Therefore, this revolutionary decision GM made will undoubtedly put pressure on Ford and Stellantis.

Mack Trucks Union Members To Join Striking Detroit Autoworkers

As announced on Sunday night, 74% of UAW members rejected a tentative deal that was reached last week by the union and Mack Trucks as they felt it was significantly short of what UAW’s demanding in ongoing negotiations with General Motors, Ford and Stellantis. As of 7 a.m. on Monday, about 3,900 workers from facilities in Pennsylvania, Maryland and Florida are on strike. Although Mack Trucks is a separate company and a different part of the union compared to the section that covers members employed at the Detroit automakers, UAW workers were expecting similar increases and benefits as their peers.

The Strikes Are Harming A Very Lucrative Segment

The strikes already costed GM $200 million in the third quarter. With the walkouts and part shortages that idled production, they impacted the production of small and midsize pickups, as well as of SUVs. 2023 has been named as the year of the electric pickup before it even began with Tesla Inc TSLA finally debuting its long-promised cybertruck. The strike also targeted parts distribution centers which means both dealerships and drivers could soon feel the impact.

At GM, Chevrolet and GMC midsize pickups, Chevrolet Traverse, Cadillac XT4, as well Buick Enclave SUVs and Chevrolet Malibu sedan were affect. The strikes also halted production of Ford-made Ranger midsize pickup, Ford Bronco, Explorer and Lincoln Aviator SUVs, along with Stellantis-made Jeep Wrangler SUV and Gladiator.

Yet, in West Seneca, NY, an automotive parts manufacturer is working full speed. 

The tonneau cover specialist, Worksport Ltd WKSP, recently revealed it signed a long-term supply agreement for its hard-folding and soft-folding covers that could bring in $16 million in annual revenue. Worksport already has an order of $1.6 million for its hard-folding covers and another of $720,000 order for the soft-folding covers from the same customer. 

More importantly, Worksport continues to develop revolutionary solar-powered accessories, the SOLIS tonneau cover and COR portable system that brought the attention of Hyundai Motor Company HYMTF who will be getting a customized version of these power-on-the-go tools. Hyundai is the latest automaker to adopt the Tesla charging system. By announcing the news on Thursday, Kia, Hyundai and Genesis, all part of the Hyundai Group, but with Hyundai and Kia operating as separate companies in the U.S., have joined General Motors, Ford, Mercedes-Benz Group AG MBGAF, Nissan Motor Co NSANF, Honda Motor Co Ltd HMC and Volvo. According to figures from Kelley Blue Book, Hyundai, Kia and Genesis counted together make the second-best-selling EV manufacturer in the United States, right behind Tesla. Hyundai, Kia and Genesis sold 37,800 EVs during the first half of the year while Tesla sold more than 330,000, but this is still a big milestone for the NACS Tesla charging standard. 

Catching up to Tesla who only continues to evolve is a daunting endeavor as the EV king is a moving target. The UAW strike will undoubtedly make it harder for GM, Ford and Stellantis to play the already costly EV game and cast a shadow on 2023’s pickup theme.

DISCLAIMER: This content is for informational purposes only. It is not intended as investing advice.